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From Zimbabwe Mining Revenue Transparency Initiative to the Extractive Industries Transparency Initiative

Mutuso Dhliwayo and Mukasiri Sibanda[1]

Introduction

Despite going in circles on the adoption and implementation of the Extractive Industries Transparency Initiative (EITI)in Zimbabwe, consensus for mining sector transparency reforms exists among stakeholders. Through fiscal policies, the government has repeatedly committed to either implement EITI or revive the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI) a home-grown version of EITI that suffered still birth in 2013. Recently, Government raised concern that data inadequacy and inaccuracy has stalled progress for a comprehensive mining fiscal regime which balances national development interest and the interest of investors[2].

Industry, acknowledges that;

“A shared mining vision is not feasible whenever information asymmetries exist among stakeholders, and dissonance among key stakeholders always manifests itself as policy discord, which undermines the performance and long-run development of the sector.[3]

Civil society, through Publish What You Pay (PWYP) campaign essentially, have continually urged government to implement EITI to help cure the disconnect between mining and local socio-economic development opportunities.

Cognisant that past attempts to bring much needed mining sector transparency reforms were fruitless, this time around, PWYP campaign is seeking to reinvigorate itself to hold government and corporates more to account through the adoption and implementation of EITI. As part of reinvigorating PWYP, the Zimbabwe Environmental Law Association (ZELA), is producing a series of papers to generate and sustain momentum for implementation adoption and implementation of EITI. This paper seeks to unpack government’s past efforts to implement ZMRTI and the developing interest on EITI, drawing lessons, and to highlight key drivers for revived interst in the adoption and implementation of EITI.

So much has changed since government made its first commitment in 2011 to adopt and  implement ZMRTI. The move towards the adoption of the EITI is as a result of a number of factors. A new Constitution was adopted in 2013 which contains several provisions on good governance, transparency and accountability which resonates with EITI principles. “Zimbabwe is open for business dictum ”[4], a rebranding exercise undertaken by the new government to attract investment has been adopted. In the murky Marange diamond fields, a new company called Zimbabwe Consolidated Diamond Company (ZCDC) was birthed to deliver greater transparency and accountability in the diamond sector.  Several mega deals running into billions have been announced for the mining sector alone. The anti-corruption drive and government’s focus on re-engaging the international community to unlock fresh development finance.

Given the ever-evolving context, reflecting on past experiences, picking lessons and fine tuning  advocacy and campaign offers an exciting value proposition.

Background

Zimbabwe’s diverse and significant mineral resource base is characterized by opacity[5]. This opacity is evident in the granting of licenses[6], negotiations of contracts[7], production data[8], the collection[9], allocation[10], expenditure and accounting of mineral revenue.  This has resulted in the mining sector not fulfilling its potential and expectations in terms of contributing towards economic development and improved service delivery. Rather than being a blessing by bringing sustainable economic, social and political development, Zimbabwe’s mining activities have resulted in the proverbial natural resources curse.  One of the reasons for this state of affairs is a poor mineral resources governance framework. This lacuna resulted in Civil Society Organisations in 2009 to begin advocacy efforts for the adoption of a good mineral resources governance framework by the Zimbabwe government. The objective of these efforts was to improve how mineral resources are exploited and the revenues generated therefrom managed. There are a number of mineral resource governance frameworks. These include the World Bank’s Extractive Industries Transparency Initiative (EITI), the Africa Union’s Africa Mining Vision (AMV) and the Natural Resources Charter (NRC). The EITI is among the most globally known mineral resources governance frameworks.

To that end, it was natural for CSOs in 2010 to advocate for the adoption of the EITI by the government of Zimbabwe as a mineral resources’ governance framework.[11] To strengthen work on advocacy for a better mineral resources governance , CSOs launched the Publish What You Pay (PWYP)  Zimbabwe Chapter campaign in 2011.[12] The Government of Zimbabwe was not open to adopting EITI then due to a number of reasons. These were mainly political. The government of Zimbabwe then was having some serious problems with international initiatives like the Kimberly Process Certification Scheme (KPCS) regarding allegations of human rights violations over the exploitation of the Marange diamonds. They therefore saw joining the EITI as another additional layer of compliance with international initiatives which they regarded then as burdensome. However, while opposed to EITI as a framework, they were not opposed to the EITI principles which they saw as important in revenue transparency and accountability[13]. The Ministry of Finance and Economic Development (MoFED] was particularly receptive to EITI while the Ministry of Mines and Mining Development [MMMD) was the most critic. While there are so many reasons why the mining sector was facing transparency challenges and still is,  its mainly because of an old and archaic legal framework reflected in the Mines and Minerals Act.[14]

The adoption of the Zimbabwe Mining Revenue Transparency Initiative

Based on the understanding that Zimbabwe needed an initiative that promotes transparency and accountability but not necessarily the EITI, a compromise was reached to adopt the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI). ZMRTI was an initiative of the Government of National Unity (GNU) that was there from 2009 to 2013. The initiative was housed  under the Office of the then Deputy Prime Minister [ DPM], Thokozani Khupe. ZMRTI was approved by the GNU through the Medium-Term Plan on July 7, 2011[15] and was launched on the 8th of September 2011.

The DPM was the chairperson of the Cabinet Resource Mobilisation Committee. Among its responsibilities were “to come up with innovative ways of expanding the revenue base for the national purse”[16].  The ZMRTI was seen as one such innovation. The ZMRTI was based on the understanding of the role the mining sector could play in the recovery, stabilization and growth of the economy. The ZMRTI was as a result of the determination of the GNU to give priority to “ rebuilding the mineral and mining sector as a core pillar of Zimbabwe’s economic and social turn around and development plans and to ensure that the country’s mineral wealth and natural resources were  developed and exploited for national benefit to help achieve growth , poverty reduction and economic and social equity”.[17] The ZMRTI was also a response to the growing interest and desire by stakeholders within the then GNU to have a better understanding of the contribution of the mining sector to Zimbabwe’s economic position. This was very evident in the debates of the amount of taxes paid and the benefits accruing from mining operations.  The objectives of the ZMRTI were therefore to:

  1. Create a participative and multi stakeholder process in order to promote dialogue and build trust by creating and effective forum for addressing mining sector issues and potentially providing concrete recommendations to national policy makers for decisions and action
  2. Generate independently -reconciled information for public dissemination setting out all significant mining sector revenues flows paid by the industry and received by government; and
  3. Create a platform for ongoing policy reforms designed to achieve good governance of the nation’s mineral resources and promote investment for the benefit of the country [18]

From the objectives, it is clear that while ZMRTI derived its core principles from EITI. However, it is important to note that while ZMRTI derived principles from the broad EITI Standard, it was designed then to be implemented as “ a wholly Zimbabwean initiative to be implemented by Zimbabwean stakeholders in order to meet Zimbabwean national policy goals”.[19] The ZMRTI was aimed to be stepping stone to Zimbabwe joining the EITI. The hope was that if ZMRTI was successful, it was in due course going to evolve as a process and Zimbabwe would apply to join and be part of the global EITI movement and apply the EITI Standard rules and methodologies as many countries that have joined are doing and derive benefits from joining the EITI.

                                                                                                                                                                                                      (ZELA) was invited by the then ODP to coordinate the participation of Civils Society Organisations (CSOs) and Community Based Organisations (CBOs) into the ZMRTI process. Among the CSOs and CBOs that ZELA brought into the process are the Chiadzwa Community Development Trust (CCDT),  and Centre for Research and Development (CRD).

Progress in the implementation of the ZMRTI

Progress towards the implementation of the ZMRTI was made during the tenure of the GNU. This included the development of the ZMRTI Oversight Group Charter which defined membership, roles and working rules. The Oversight Group which had 18 members made up of Government, CSOs and mining companies was also set up. There was also development of a ZMRTI work plan for 12-18 months beginning in January 2012. Terms of reference had also been developed for the Scope and Content of the first ZMRTI Report.

Death of ZMRTI

The GNU ended in July 2013 and this marked the death of the ZMRTI or at least left it in limbo. While the   ZMRTI was a product of the GNU, it was mainly driven by the Movement for Democratic Change (MDC) under the ODP. To that end, it was viewed or perceived as an MDC initiative by the incoming government led by Zimbabwe African Union National Patriotic Front (ZANU PF) after the harmonized elections of July 2013. ZANU PF was not supportive of ZMRTI. That perception was very surprising because in as much as the ODP was leading ZMRTI, the initiative for all intents and purposes was a product of the GNU. However, while the Government was not supportive of ZMRTI after 2013, it remained interested in transparency and accountability issues in the mining sector. This was based on the economic realities like the need to enhance Domestic Resource Mobilisation (DRM). This thinking was reflected in the policy document / economic blue print that was adopted by the government called the Zimbabwe Agenda for Sustainable Socio- Economic Transformation (ZIMASSET).

Effective DRM to finance ZIMASSET was not possible in the absence of transparency and accountability.  Tellingly, it was the Ministry of Finance and Economic Development (MFED)that remained interested in transparency and accountability either in the form of reviving the ZMRTI or through the adoption of EITI. However, fiscal policy statements muted on implementation of either EITI or ZMRTI until the interest was reignited in the 2019 National Budget Statement.  It is important to note that during the tenure of the GNU, it was the MoFED that was in the forefront of championing a mineral resources governance framework. Then the Ministry was under the leadership of a Minister from the MDC. However, even under the leadership of a ZANU PF Minister after 2013, the Ministry remained interested in transparency and accountability issues.

The move towards adoption of EITI

Of late, we have witnessed renewed efforts by the Zimbabwean Government to adopt the EITI.[20] PWYP campaign and ZELA played a role to reignite this interest through blended advocacy strategies. Both oral and written submissions on the need to revive interest in joining EITI were made to Parliament Portfolio Committee on Mines and Mining Development during pre-budget public consultations. Further, ZELA worked with various media houses on including the Zimbabwe Broadcasting Television (ZTV) to ratchet pressure on adoption on EITI[21].  ZELA, also engaged with champions within the MoFED to revive government’s interest to join EITI.  Consequently,

In 2018, MoFED approached ZELA and indicated the desire of the Government of Zimbabwe to join the EITI asking for guidance and advice on the steps and process of joining. ZELA advised that the first step was a high-level policy statement/ commitment and that the upcoming 2019 National Budget Statement offered that opportunity. The Ministry went on to make that commitment to join the EITI in the 2019 National Budget Statement.[22]

This was followed by the MMMD approaching ZELA to coordinate a “Dialogue on the prospects of adopting and implementing the EITI in Zimbabwe”. This request coincided with the holding of the 8th EITI Global Conference that was held in Paris from the 17-19th of June, 2019. ZELA, with the support of development partners like United Nations Development Programme (UNDP) facilitated the participation of the three MMMD officials including the Permanent Secretary, Mr. Onesimo Mazai Moyo, the Senior Legal Officer and Minerals Development Officer. During the meeting, the Government of Zimbabwe officials had an opportunity to meet the EITI Secretariat. The Permanent Secretary also made some remarks in the closing plenary, reiterating Zimbabwe’s desire to join the EITI.[23]

The EITI Global Conference was followed by a meeting organized by ZELA in collaboration with the MMMD to explore the prospects of Zimbabwe joining the EITI. The meeting was held on the 15th of July.[24] Its objective was to sensitize stakeholders on what the EITI was about and how Zimbabwe can join and the advantages and disadvantages thereof. The meeting was supported by GIZ, Oxfam and UNDP. The resolutions from the meeting were as follows:

  1. Need for a political declaration / commitment by the Government that Zimbabwe is joining the Extractive Industries Transparency Initiative
  2. A much bigger consultation is needed where Government comes with its own analysis of the benefits of joining EITI. This should be undertaken by the relevant Government Ministries
  3. ZELA must hold EITI Inclusive consultative meetings and get more stakeholders on board. The EITI process might be the same in the countries but application can be different
  4. ZELA to simplify the EITI Standard and share this with different stakeholders
  5. Need to know who will comprise the EITI Board especially ensuring that those people bring value

The July 15 meeting was followed by a meeting held from the 2nd-3rd of October, organized by the MMMD with support from GIZ. This meeting was attended by the EITI Secretariat. The objectives of the meeting were as follows:

  1. Consolidate efforts towards building a common understanding of EITI drawing on expertise of the EITI Secretariat and other experts
  2. Have comprehensive understanding of the implications of Zimbabwe joining the EITI against the sanctions imposed under the Zimbabwe Democracy and Economic Recovery Act
  3. Come up with clear, tangible steps on the next steps towards adoption and implementation of the EITI or a clear road map

Drivers for government to join EITI

  1. Convergence of principles: The Constitution and EITI

The 2013 Constitution, the supreme law contains provisions which resonates well with EITI principles. Basically,  the constitutional provisions on transparency and accountability gives government the impetus to join EITI. It has strong provisions on transparency and accountability including in the mining sector. Section 9 of the constitution provides for good governance.  It provides that “the State must adopt and implement policies and legislation to develop accountability, transparency and financial probity”. This applies to natural resources governance including the mining sector. It further calls for measures to be taken to expose, combat all forms of corruption and abuse of power by those holding political and public office.[25]

The constitution also makes provisions for access to information by affected and interested stakeholders as long as that information is required in the interest of public accountability.[26] There is a lot of interest for accountability within the mining sector. Section 85 expands the locus standi and this further enhances transparency and accountability. The constitution also establishes Principles of Public Financial Management.[27] It calls for transparency and accountability in financial matters. Furthermore , its makes provisions for procurement and other governmental contracts.[28] It calls for an Act of Parliament that prescribes procedures for the procurement of goods and services by the State and all institutions and agencies of government so that procurement is effected in a way that is transparent , honest, cost effective and competitive.[29] In addition , it calls for the enactment of an Act of Parliament  to provide for the negotiation and performance of the following contracts :

  1. Joint venture contracts and concessions of minerals and other rights to ensure transparency, cost effective and competitiveness.[30]

The constitution also calls for the establishment of institutions to combat corruption like the Zimbabwe Anti-Corruption Commission (ZACC).[31] All these constitutional provisions on transparency and accountability, establishes a strong foundation for the continued interest to develop and adopt mineral resources governance frameworks that promote transparency and accountability.

  • Zimbabwe is open for business

To attract essential foreign direct investment (FDI), government is on a rebranding exercise throughthe new mantra “Zimbabwe is open for business.” A quite simply appealing message. If Zimbabwe is surely open for business, certainly, what stops government from being open about the business of mining sector transparency in this case.  Therefore, government must embrace policy reforms to show openness in a sector general perceived locally and globally as murky. One important area of reform is implementation of EITI, an initiative regarded as a global best practice on openness and accountable governance of oil, gas and mining industries. By so doing, government will be sending a clear message to the international community and its citizens, the Zimbabwe open for business mantra is not a fluke.

  • The quest to reengage with International Financial Institutions (IFIs)

To move the country away from isolation and to unlock access to finance for development, government is prioritising engagement with International Financial Institutions (IFIs). The IFIs include International Monitoring Fund (IMF) and the World Bank.  In this bid, government must prove seriousness on enhancing its domestic resources mobilisation (DRM) capabilities. A move which helps to justify the importance of external support to the country’s socio-economic development thrust. Because Zimbabwe is a mineral rich country, demonstrating the nexus between mining and DRM is critical. Without transparency, leveraging mining sector for DRM will prove to be a daunting exercise. In the past, government, as part of the IMF’s staff monitored programme (SMP) managed to publicly disclose audited annual reports for the Zimbabwe Mining Development Corporation (ZMDC). By implementing mining sector transparency reforms in the form of EITI, government will be adopting a proactive stance to improve resource governance.

  • Europe ,United Kingdom and Canada’s mandatory disclosure requirements

Data on various payments made to government by major mining companies operating in Zimbabwe which are either registered or listed in EU, UK and Canada is already in the public domain.  Such companies include Caledonia’s Blanket Mine which promotes tax revenue transparency because of Canada’s Extractive Sector Transparency Measures Act (ESTMA). Anglo-American owned Unki Mine, for example, is disclosing information on payments made to government at the behest of the EU accounting directive. Given this important ventilation of Zimbabwe’s mining sector, government must be encouraged to entirely open the mining sector for greater public accountability. Importantly, government once angled for local primary listing of all companies in the mining sector as part of the amendments to the Mines and Minerals Act through the Mines and Minerals Amendment Bill. Of course, this was dropped due to pressure from investors who felt that the domestic market does not have capacity to mobilise investment capital. However, another important objective of achieving good governance in the mining sector, greater transparency and accountability suffered as a result because listed companies have a high corporate governance compliance bar. This noble objective can still be achieved if government implements EITI.

  • Past lessons from scandalous management of Marange diamond fields

Conceding that the nation missed out from a getting a fair share of benefit from the exploitation of Marange diamonds, to bring better transparency and accountability, government embarked on consolidation of the diamond mines[32]. All the seven mines that were operating in Marange and DTZ OZGEO, operating in Chimanimani were given a boot in 2016.  The Zimbabwe Diamond Consolidated Company (ZCDC) took over the diamond Marange diamond mining activities. Among its several objectives, ZCDC seeks to ensure transparency and accountability in the diamond mining sector and to enhance diamond mining fiscal linkages. A holistic approach is needed to deliver greater transparency to the mining sector instead of an ad hoc approach to governance challenges in the sector. By adopting EITI, government will cover all mineral sectors, all mining players, public and private, on greater transparency and accountability.

Recommendations

Government;

  • must recognize the convergence of principles between the Constitution and EITI as an opportunity to adopt EITI, a globally acceptable standard which enables alignment of laws with the Constitution.
  • must take the opportunity to embrace EITI to strengthen its rebranding exercise, the Zimbabwe is open for business agenda. EITI will enable government to prove its willingness to be open about business in the mining sector.
  • must build raptured public trust and confidence in its stewardship role in the governance of mineral resources by implementing EITI, opening the mining sector using a globally acclaimed framework.
  • must implement EITI as a holistic approach to transparency and accountability challenges facing the mining sector in Zimbabwe.
  • PWYP must reinvigorate its advocacy campaign strategy to ensure government’s renewed interest to join EITI does not go to waste as witnessed in the past since 2011.

Conclusion

Convergence of interest among stakeholders, government, industry and civil society offers a great opportunity for the implementation of EITI in Zimbabwe. Although there are several drivers for implementation of EITI in Zimbabwe, the ignition factor is the convergence of Constitutional and EITI principles. By adopting EITI, Government gets a clout to convince skeptics of the Zimbabwe is open for business agenda, who decry lack of openness and accountability of the mining sector. Past lessons from poor exploitation of Marange diamonds are a reminder to government. Vision 2030 and the Transitional Stabilisation Plan (STP) driven by the development of the mining sector can easily be scuttled because of lack of transparency. Whilst government’s reignited interest in join EITI is a plus on civil society advocacy, the work has just begun. In the past, government’s repeated commitment to implement EITI or revive ZMRTI yielded nothing on the ground. For this to work this time around, the approach must be reinvigorated, a nimble advocacy strategy is a must to hold government and corporates more to account on adoption and implementation of EITI.


[1] Zimbabwe Environmental Law Association

[2] Treasury, 2019 Mid Term Budget Review and Supplementary Budget, page 88.

[3] Isaac Kwesu, Chief Exectutive Officer of the Chamber of Mines of Zimbabwe . State of Mining Survey Report , 2015

[4] Government of Zimbabwe 2018. Towards an Upper Middle Income Economy by 2030.

[5] Global Witness, 2012.  Diamonds: A good for Zimbabwe? Who controls revenues from Marange Diamonds Fields: A case study of Mbada and Anjin companies

[6] Artisanal and small-scale miners raised concern on lack of transparency and accountability on allocation of exclusive prospecting orders. This was raised during the breakaway session on ASM at the 8th edition of the Zimbabwe Alternative Mining Indaba.

[7] There is not Act of Parliament to guide negotiation and performance of mining contracts as required by the Constitution, Section 315 (2) (c).

[8] In the gold sector for instance, data used by policy makers is on gold deliveries to government and production figures are barely disclosed.

[9] Revenue performance reports generated by the Zimbabwe Revenue Authority, the country’s tax collector does not show mining sector performance per each revenue head, corporate tax, value added tax, customs duty, pay as you earn, withholding tax. The only distinct mining revenue head disclosed is income from royalties.

[10] The budget rarely earmarks revenue streams for enhancing sustainability required by the constitutional principles on public financial management, for instance, intergenerational sharing of wealth.

[11] Zimbabwe Environmental Law Association, 2011.  Sowing the seeds of advocacy work on transparency and accountability in the extractive sector in Zimbabwe

[12] Members of the Publish What You Pay Coalition are Zimbabwe Environmental Law Association , Women and Land in Southern Africa , Transparency International Zimbabwe , Zimbabwe Coalition on Debt and Development , Center for Natural Resources Governance, Institute for Sustainability in Africa , Povervty Reduction Forum Trust , Zimbabwe Allied Diamond Workers’ Union , Mutoko Youth Initiative and Chiadzwa Community Development Trust.

[13] Rodget Mpande and Benson Zizwai , 2010. Zimbabwe scoping study report on Extractive Industries Transparency Initiative.  A study commissioned by the Zimbabwe Environmental Law Association

[14] Chapter 21:05

[15] Government of Zimbabwe, 2011. Medium Term Plan 2011-2015.

[16] Thabani V.Mpfofu. Principal Director Research and Development, Office of the Prime Minister. Why the Zimbabwe Mining Revenue Transparency Initiative (ZMRTI)? How it will be structured and implemented.

[17] Ibid

[18] Ibid

[19] Ibid

[20] Zimbabwe Environmental Law Association, 2019. Zimbabwe’s move to adopt the Extractive Industries Transparency Initiative commendable

[21] http://www.zbc.co.zw/govt-urged-to-implement-extractive-industry-transparency-initiative/

[22] Government of Zimbabwe , 2019 National Budget Statement. Mining Transparency , paragraphs 526- 532

[23] Mutuso Dhliwayo and Joyce Machiri, 2019.  Momentum for the adoption of the Extractive Industries Transparency Initiative builds in Zimbabwe.

[24] Ministry of Mines and Mining Development and Zimbabwe Environmental Law Association, 2019.  Report on Dialogue on the prospects of adopting and implementing the EITI in Zimbabwe.

[25] Section 9(1)(b)

[26] Section 62

[27] Section 98

[28] Section 315

[29] Section 315(1)

[30] Section 315 (2) (a)(c)

[31] Section 254

[32] Treasury, 2015 National Budget Statement, page 32

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